Friday, 18 November 2011


During the week of November 13th, President Obama endeavored to reassert US hegemony in Asia. Taking advantage of the Asia Pacific Economic Cooperation summit, he sent a strong signal to China that the US would not surrender the broader Asia Pacific region to China that is gearing up to replace the US as the historic hegemonic power.  Joining the US in a new trade bloc were Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam, with Japanese Prime Minister Yoshihiko Noda expressing an interest at this juncture, but very unlikely to join under the terms that the US has imposed. 

In an address before the Australian parliament on 17 November 2011, Obama maintained that America's future rests in the Asia Pacific region, perhaps a point well taken given the troubles of Europe and its limited growth prospects, as well as the problems in the Middle East that has been providing the US with oil for almost a century. Does this mean that the US is trading its trans-Atlantic future for a brighter trans-Pacific one?

The US is trying to make sure that it retains a solid trade bloc from which both China and EU would have less competitive advantage. However, the US is interested in using the trade bloc for geopolitical considerations, given that it plan to station troops in Australia, and to put pressure on China that continues to keep its currency undervalued and continues to violate intellectual property rights. 

At this stage, the Trans-Pacific Partnership may appear to be more symbolic than real, given that it represents a mere 6% of US total trade. However, the new bloc has enormous potential as a free trade zone that could eventually integrate up to two dozen countries of the Asia-Pacific Economic Cooperation group. But the potential of the Trans-Pacific Partnership is immense.

One goal of the US is to place new limits on China's economic nationalism and to strengthen private enterprises, especially US corporations trying to gain more favorable terms in China. As the US tries to play a larger role in determining the Trans-Pacific economic balance of power and to impose upon China rules of Wall Street, it finds that China sees its future with existing policies of quasi-statism, rather than neo-liberalism. 

China is slowly making concessions to foreign corporations and it has made some compromises on raising the value of its currency. It has been importing more, as the US demands, and it has made some progress on intellectual property rights. The most powerful leverage that the US has in forcing China to conform to its demands on monetary, trade and investment policy is a trade deficit with China of $273 billion for 2010. China's most significant leverage is that it purchases US bonds, a policy that help to keep the dollar at artificially high levels. 

The future of the US is indeed in the Asia-Pacific region, and not in the trans-Atlantic region where the EU dominates and seems to be having serious structural problems with the integration model on which it was founded. The question is whether the US can work with China to carve out spheres of influence - in every respect from political, military and economic - so that China-US coexistence can evolve harmoniously in the course of the 21st century. 

Conflict may become inevitable, not necessarily from China as many analysts assume at this point, but from Japan that China has pushed into the world's third economy and losing ground, and whose prospects are not very good moving forward. Instead of watching the obvious US-China rivalry, it is of greater interest to see how the US-Japan and China-Japan rivalry will evolve during this decade. Japan's security guaranteed by the US makes Japan vulnerable and weak in trying to challenge US for hegemony in the Asia-Pacific region. 

Japan's historic and highly structured relationship with the US is both a guarantee for stability and a limitation upon Japan's ambitions if they conflict with US expansion goals as they now do over the US-led Trans-Pacific trade bloc. If the US is to challenge China's supremacy in Asia Pacific, Japan would have to play 'junior partner' role, or at the very least stay of America's way. 

This means that the US would set limits on Japan's growth, a prospect that would be very difficult given the degree to which Japan is firmly entrenched throughout the Asia-Pacific region. In order to limit China's regional influence, the US must necessarily relegate Japan to a regional power that subordinates its interests to American global power as in the Cold War. 

Analysts see Japan cooperating to a degree with the US, but also fighting back against the game of regionalism that the US is playing. Unlike Europe that has been looking back to its history, Japan looks forward to the future as it has been engaged in an intense competition in the fields of science and technology that is the backbone of industrial research and the key to competitiveness. US-Japan economic rivalry is hardly new, but it seems that the Obama administration may be laying the groundwork for a new era of underlying conflict that has China as the ultimate target.

Of course, Japan may decide to join the US in its quest to limit China's Asian influence selectively on a case-by-case basis. It is also possible that Japan will accept the regional supporting role that the US wants it to play and accept that its position is not much different than during the Cold War. No matter what Japan does, the US will have to pay a price of the politics  of regionalism in the Pacific, but the question is whether it discovers along the way that Japan will be an even greater challenge than China, and whether Japan moves toward realignment to strengthen itself against Western imperial hegemony.

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